I don't think the second part is a semantic game at all. This switch to insure all deposits rather than just deposits up to a fairly low limit will definitely impose additional costs to the banking sector which will definitely be passed on to some degree or other. I agree this is certainly not a transfer of tax money to private institutions, and I applaud that, but I still think it is socializing a big chunk of additional risks of an industry where the rewards are large and private.
But more broadly I just don't think "bailout" is as narrow as just "costs taxpayers". This may be wrong, but I think of "bailout" as having its root in what you do to save a sinking ship. The widespread belief here is that there was a significant risk of an important ship - the banking sector - sinking, and government action has been taken to keep it from sinking. To me, we've bailed out that sinking ship. (And I'm glad we did!)
I guess it remains to be seen whether I'm the weirdo with a strange definition, or whether everyone will agree that this was a bailout, once it stops being a question with such immediacy.
I do see where your definition of a bailout is coming from, I don’t think it’s that weird. Perhaps the disconnect is that I’m assuming people would not hate a bailout that they actually genuinely really don’t pay anything for; they would press a button to bail out a sinking ship if it was really free to do so, even if the ship was sinking solely by incompetence on the part of the ship’s captain.
So the opposition to bailouts is actually “opposition to bailouts that cost taxpayers” plus an enormous dose of “we know you sneaky fuckers always lie about bailouts not costing taxpayers so we will assume all bailouts cost taxpayers”.
The disconnect comes from the question of whether there is actually a magical thing where government can provide insurance to private entities without it costing society anything. Of course that magic doesn't actually exist. Public subsidies always cost something.
I liked this definition of what a bailout is, which meshes with mine but puts it in better words, via Dan Davies on today's Odd Lots podcast:
> "When the state steps in and provides insurance so that something economically destructive doesn't happen."
Yeah, like I said, this is the disconnect. Assume for a moment that magic does exist. Maybe aliens come to Earth and hands the government a stack of gold from outside the solar system worth exactly that much, which the government uses to pay for the bank’s issues and nothing else, and then the aliens leave promising to never return. If that happens, it didn’t cost taxpayers anything, so it can’t be called a bailout, since bailouts necessarily cost the taxpayers. Except in another sense it is obviously a bailout, the aliens literally flew in from outer space and bailed out the bank and the government.
So a bank bailout is when an outside party pays to solve the issue, and a bailout is also when taxpayers foot the bill. If taxpayers do not foot the bill for SVB in any appreciable way, is it a bailout?
> I liked this definition of what a bailout is, which meshes with mine but puts it in better words, via Dan Davies on today's Odd Lots podcast:
> "When the state steps in and provides insurance so that something economically destructive doesn't happen."
So the FDIC existing is a bailout to start with, so arguing over whether SVB should get a bailout isn’t about the systemic risk exception being invoked at all, but about the existence of public deposit insurance in any form?
But more broadly I just don't think "bailout" is as narrow as just "costs taxpayers". This may be wrong, but I think of "bailout" as having its root in what you do to save a sinking ship. The widespread belief here is that there was a significant risk of an important ship - the banking sector - sinking, and government action has been taken to keep it from sinking. To me, we've bailed out that sinking ship. (And I'm glad we did!)
I guess it remains to be seen whether I'm the weirdo with a strange definition, or whether everyone will agree that this was a bailout, once it stops being a question with such immediacy.